A privately owned company and a joint venture have been approved to engage in direct sales in China, bringing the total number of direct selling companies in China to seven.

Privately owned Joinmay Health Food headquartered in Nanjing with annual revenues of more than two billion yuan, and joint-venture Ningbo Sansheng that specializes in houseware has a registered capital of 156.8 million Hong Kong dollars, according to a recent circular issued by the Ministry of Commerce.

This is the third time this year that China has issued direct selling licenses. Ever since the first license was issued to Avon in February, three local companies and four joint ventures have also been approved. Most of them are in the business of cosmetics, healthcare and sanitation products.

Chinese authorities have been cautious in issuing direct selling licenses to prevent what is otherwise known as "pyramid selling", which was rampant in the late 1990s.

Earlier this month, the Ministry issued a circular reiterating the stipulations of the Direct Sales Administration Rules and the Rules on Prohibition of Pyramid Sales that took effect last December and that require companies to set up their service networks within six months of receiving their licenses.

To protect consumers, direct selling enterprises must disclose accurate and comprehensive information to the public and may not engage in high-profile promotion activities.

According to the Ministry's website, another 25 companies, including nine foreign firms, have applied for direct selling licenses. They have all declared that they will abide by China's laws and regulations.

(Xinhua News Agency August 22, 2006)